KUALA LUMPUR: Building materials wholesalers and distributors Unitrade Industries Bhd (UIB) today signed a share sale agreement (SSA) with Intergreen Holdings Sdn Bhd (IHSB), Intergreen Corporation (M) Sdn Bhd (ICSB), and Pong Wing Seng to acquire 51 per cent equity interest in Intergreen Metals Sdn Bhd (IMSB) for RM66.3 million.
The SSA is the definitive agreement following the preliminary framework established via the heads of agreement (HoA) signed on July 31, 2023, between UIB and IHSB, ICSB and Pong.
UIB managing director Nomis Sim Siang Leng said the acquisition of IMSB is a strategic move that complements and
synergies with the company's core operations in building materials, wholesaling, and distribution.
"By venturing into metal recycling, we penetrate the circular economy market and promote responsible consumption by optimising material usage.
"Currently, our network of industry contacts overlaps with that of IMSB - we procure products from steel manufacturers, and they provide metal waste as raw materials to these mills.
"Combining forces under an enlarged entity that is supported by our strong financial backing, I am certain we can deliver significantly greater value to the steel mill companies and enhance the steel industry overall," he said in a statement.
IMSB is a metal waste recycling company with 20 years of proven track record since its establishment in 2003.
The company is primarily engaged in the metal recycling business, specialising in collecting and processing metal waste to be recycled into input feedstock for steel manufacturers.
The acquisition also entails a profit guarantee, in which IMSB will achieve a net profit of RM45.0 million over FY24, FY25, and FY26.
"This represents an opportunity to broaden our UIB's earnings base. IMSB have a proven track record of delivering consistently healthy revenue and profit over the past three years.
"Additionally, the included profit guarantee in the acquisition is expected to strengthen UIB's bottom line, offering a positive prospect for continued growth, Sim said.
He said the acquisition is another milestone towards the company's continuous efforts to be environmentally responsible.
"This aligns seamlessly with our sustainability agenda as we transform waste into valuable resources, underscoring our overall commitment
to implement sustainable business practices," he said.
The acquisition is expected to be funded fully through internally generated funds and is expected to be completed by the end of December 2023.